Summary from Initial Comments · The particular resources that Staff would have liked to see...
Transcript of Summary from Initial Comments · The particular resources that Staff would have liked to see...
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BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
LC 56
In the Matter of PORTLAND GENERAL ELECTRIC 2013 Integrated Resource Plan
STAFF’S FINAL COMMENTS
Summary from Initial Comments:
As noted in the initial comments, Staff finds that Portland General Electric’s (PGE or the
Company) 2013 IRP generally adheres to the Guidelines and relevant Orders put forth by the
Commission related to least-cost, integrated resource planning. Nevertheless, Staff identified
several specific areas of concern that warranted further examination and analysis. For the most
part, between subsequent additional discovery and explanations provided by the Company in
their reply comments, Staff believes the issues of concern have been adequately addressed for
this IRP.
The following is a list of the topics and issues Staff raised in the initial comments. The remainder
of these final comments will address the topics one by one.
General compliance with Guideline 1
Energy Efficiency issues and compliance with Guideline 6
Demand Response issues and compliance with Order 10-457 and Guideline 7
Environmental issues and compliance with Guideline 8
Distributed Generation and compliance with Guideline 12
Load forecast issues
Natural gas forecast issues
RPS compliance alternatives
General Compliance with Guideline 1:
Guideline 1 states in relevant part:
“All resources must be evaluated on a consistent and comparable basis.”
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In Order 07-002 establishing the IRP Guidelines, the Commission notes:
We do not want utilities to limit their consideration to currently available
resources, but rather to include all those that are expected to become
available. We prefer the IRP be inclusive of all such resources and allow the
parties to debate in the planning process whether it is reasonable to rely on
a new technology.1
Staff notes that the terms “consideration” and the directive to “include” all resources in the IRP
as used above still provides a great deal of latitude to the Company. The direction given to the
Company allows compliance with the guideline over a wide range of analysis. Staff’s concern
with the Company’s treatment of some resources, especially those utilizing newer technology, is
about the level or degree of consideration lent to these resources in the IRP.
The particular resources that Staff would have liked to see addressed at greater length in the IRP
are distributed generation, solar, biomass, battery storage, and “conservation voltage reduction”
(CVR). Staff agrees that the Company has met the minimum requirements for compliance with
Guideline 1 in regards to these resources.
However, Staff believes that these resources will play a more prominent role in prospective
portfolio choices as the technologies mature and become more cost effective. Staff encourages
the Company to continue to monitor these resources and evaluate them in greater depth in future
IRPs. In particular, Staff encourages the Company to include these resources in future portfolio
analysis to better understand the potential economic impact of these resources on the Company’s
generation portfolio. Staff welcomes PGE’s agreement to more fully investigate energy storage
in future IRPs as stated in its reply comments.2
Energy Efficiency Issues:
In initial comments Staff indicated it was continuing to look at issues relating to lost opportunity
measures, declining energy efficiency (EE) beyond 2016, and how PGE calculates the risk
reduction value of EE. Staff has reviewed the Company’s responses to data requests on each of
these issues and has come to the conclusion that lost opportunity measures and projected
efficiency acquisition levels are being handled consistent with current Energy Trust policies and
projections. Staff understands and generally supports how PGE is testing the risk reduction value
of EE in this IRP.
CUB argues that the EE target of 124 MWa by 2017 contained in Action Item 2.a is too high
because it does not take into account that Energy Trust may not be able to acquire all cost
effective conservation from large industrial customers due to the spending limit imposed by
Senate Bill 838 (SB 838) for customers with load greater than one average megawatt. These
customers do not contribute to SB 838 energy efficiency programs and as a result, once a
threshold is exceeded, the Energy Trust plans to limit the amount of funding that can be allocated
to them.
1 See Order No. 07-002 at 4, Docket No. UM 1056.
2 See PGE Reply Comments, Docket LC 56, at p. 15
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Staff agrees with PGE in that although it is likely Energy Trust will hit the threshold level for
PGE’s large customers this year, the issue may be resolved by some other means, such as in the
pending PGE rate case. If the issue is not resolved by some other means, Staff notes that once the
threshold is exceeded, Energy Trust will have a period of time to bring the spending back to
below the threshold amount. Staff does not believe that targets should be reduced in anticipation
of potential reductions in industrial acquisitions.
Regarding Small Business Utility Advocate’s (SBUA) concern about the “total resource cost”
(TRC) test3, current PUC policy is to use the TRC with specific exceptions defined in Docket
No. UM 551, Order No. 94-590, and this will be used until the policy is modified. Staff is of the
opinion that this is not the docket to address cost effectiveness policy.
Demand Response Issues and Compliance with Order No. 10-457 and Guideline 7:
Guideline 7 directs the Company to “…evaluate demand response resources, including
voluntary rate programs, on par with other options for meeting energy, capacity, and
transmission needs…” In the initial comments, Staff noted that Order No. 10-457 further
directed the Company to provide a more comprehensive treatment of “demand response” (DR)
resources and to consider CVR in the least cost portfolio. The Company’s reply comments and
responses to data requests in this docket have provided further information on these subjects.
Based on the responses from the Company, Staff is now satisfied that PGE adequately evaluated
demand response in its analysis, as required in Guideline 7.
Data submitted to Staff in response to several data requests have addressed Staff’s initial concern
regarding PGE’s utilization of demand response. Documents supplied show that current market
and operational conditions do not provide as robust demand response opportunities as are present
in other markets across the country.
However, this same data shows some initial movement toward favorable demand response
market conditions here in Oregon. In particular, PGE’s increase in summer load (moving the
Company’s load towards a dual peak)4 as well the need to integrate intermittent resources may
offer more opportunity for demand response.
PGE currently has firm and non-firm demand response resources, emergency resources,
automated demand response, price responsive demand response, and utilization of customer-side
back up generation units. Staff does have some concerns regarding the future scale and build-out
trajectory of these resources, but until the data demonstrates a more robust need for demand
response Staff will reserve requests for action on this issue.
Below Staff presents comments on specific demand response program areas:
3 See SBUA’s Initial Comments, Docket LC 56, at p. 3
4 See PGE’s 2013 IRP at p. 36
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Critical Peak Pricing
Staff reviewed the results of the Critical Peak Pricing (CPP) pilot and noted that a CPP program
is not determined to be cost effective with the existing computer systems. PGE notes that the
new computer systems will be in place in 2017, which should greatly improve the cost
effectiveness of a CPP program. Staff recommends that PGE continue to move toward exploring
a full scale CPP program once upgraded computer systems are in place.5
Staff supports PGE closely considering the recommendations from the CPP summary report
dated May 15, 2014 completed by DNV-GL related to program evaluation and future program
implementation. Of the recommendations, Staff is particularly interested in PGE exploring how
participation and retention in the programs can be increased by providing specific and timely
feedback to customers, and by providing on-going education and support to help program
participants navigate the complexities of their new rate.
Demand Response Potential Study
Staff reviewed the confidential Brattle Group Study PGE provided entitled, “An Assessment of
Portland General Electric’s Demand Response Potential” dated November 28, 2012. PGE
provided the following information for the Brattle Group study: a) participation assumptions;
b) availability derate factors; and c) estimates of program costs.
Staff disagrees with the achievable enrollment levels that PGE provided to Brattle Group. PGE
assumed that participation levels never exceed the enrollment level observed in the first year of
PGE’s residential CPP pilot. PGE also had Brattle Group assume no growth in participation rates
over the study horizon, as observed in the existing Time of Use (TOU) program. As confirmed in
the Company’s response to Staff DR 12, PGE does nothing to advertise its TOU program, except
to electric vehicle owners. Staff is skeptical that the assumed participation rate is the best PGE
can do.
Brattle Group notes that in other successful programs in the country, the participation rates are
between 20-70 percent for opt-out programs and 20-40 percent for opt-in programs, depending
on program and customer class. Staff recognizes that the regulatory and market landscape in
PGE’s service territory is different than other areas of the country and in some ways
disadvantages demand response. Those conditions are detailed in the Brattle Group Study.6
However, Staff observes that there are other factors in PGE’s customer base that could favor
demand response programs, including an environmentally conscious customer base which might
respond well to messaging that highlights environmental benefits of DR. Staff would like to see
PGE be more reasonably optimistic about the type of participation they might expect in demand
response programs.
5 Ibid., at pp. 63-64
6 Low energy prices with little volatility, generation capacity surplus, winter peaking, low frequency of extreme load
events
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Staff questions the “availability derate factors” PGE used in the cost effectiveness assessments of
both their CPP program and in the Brattle Group Study. As suggested by Brattle Group7, Staff
believes that PGE should revisit and provide a basis for these in future assessments.
Two-Way Communication
Staff believes that two-way communications is not entirely or always necessary to communicate
a demand response signal or to verify load drop. Given the current size of PGE’s demand
response resource, Staff agrees that in the immediate term PGE benefits from having two-way
communication and control of demand response assets – such as demonstrated in the Salem
Smart Grid water heater initiative.
While this approach is more expensive, two-way communication and control may provide
additional value given that many of PGE’s more advanced demand response programs are in the
pilot phase. Two-way communications allows PGE to collect more robust data during each
demand response event to better understand and assess asset performance, customer behavior,
and end-user program acceptance.
However, as PGE builds its demand response capability, and as their demand response resources
grow in size, PGE should consider assessing whether two-way communication is necessary to
building all types of cost effective demand response. Staff believes that two-way
communications may be necessary for certain energy products that can be supplied by demand
response (such as voltage regulation); however, for other demand response products, such as
price responsive demand response, two-way communications may not be necessary.
Plug-In Adaptors
Staff noted a concern regarding PGE’s preference to using plug-in adapters for use in its direct
load control demand response programs. In response to Staff’s data requests, PGE noted that
there continues to be communication protocol interoperability issues between various appliance
manufacturers. PGE’s response to this issue has been to create a work-around by utilizing plug-
in adapters. PGE also notes its participation in the National Institute of Standards and
Technology (NIST) demand response communication protocol working groups as another effort
to help alleviate the confusion of multiple protocols in the marketplace.
However, regardless of the particular communication protocol utilized by an appliance
manufacturer, PGE should work with the market to assure end-use customers in PGE’s territory
understand the opportunities PGE offers and could offer its customers who do purchase an
appliance with the needed protocol to interact with the PGE system.
To this end it seems that PGE had a brief exchange with the Northwest Energy Efficiency
Alliance (NEEA) about potential work on demand response-enabled water heaters. Staff
encourages PGE to further impress upon NEEA and NEEA’s other funders the importance of
market transformation for demand response capable consumer products.
Advance Metering Infrastructure (AMI)
7 “An Assessment of Portland General Electric’s Demand Response Potential”, The Brattle Group, Nov. 28, 2012, at
pages 37-38
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Staff noted initial concern about whether PGE is currently leveraging its Advance Metering
Infrastructure (AMI) to enable customers to benefit from participating in demand response
programs and activities. PGE responded by noting that most customers can access interval meter
data through a PGE-sponsored web portal. However, apparently customer access of this data is
not currently normal practice for a majority of PGE’s customers.8
Staff does not view this as an indication that customers are not interested in interval metering
data but more likely that customers are not fully aware of the information available and how to
retrieve it. Once PGE has developed better back-office customer data management systems
capable of utilizing more of the AMI data, Staff recommends PGE explore how it can
communicate to customers about using their smart meters to manage their energy usage and
identify opportunities to benefit the customer and the PGE system.
EnerNOC Contract
Staff requested a copy of the contract between PGE and EnerNOC, the company currently
responsible for PGE’s automated demand response program. Staff has several concerns
regarding this contract. Staff is foremost concerned about the concept of “vendor lock,” whereby
PGE’s reliance on EnerNOC’s proprietary system may require continued contractual obligation
to EnerNOC to assure that PGE does not lose this valuable demand response resource.
To mitigate this possible issue Staff recommends PGE explore requiring the use of an open
demand response protocol as EnerNOC brings forward future capacity nomination to the
program. Staff is also concerned with a provision of the contract that allows for adjustments to
the baseline calculation. Staff recognizes the inherent difficulty in crafting demand response
baseline calculations and that some adjustment may be needed because of weather or change in
how the demand response resource is utilized or dispatched.
However, because baseline calculations are integrally important to program performance and
ultimately payment to EnerNOC, Staff requests PGE inform the Commission whenever a
proposal is made to change the baseline calculation under this contract. Lastly, the contract with
EnerNOC pays a reservation or capacity nomination payment to EnerNOC each month for the
amount of capacity EnerNOC is required to deliver. Outside of an actual demand response event
Staff was unable to discern how PGE would verify that EnerNOC can deliver the energy
represented by the nominated capacity. This concern is compounded given the duration of the
contact. If Staff has misread the contract then PGE is invited to verify the capacity nomination
made by EnerNOC.
Conservation Voltage Reduction (CVR)
Order No. 10-457 directs the Company to “[c]onsider Conservation Voltage Reduction (CVR)
for inclusion in its best cost/risk portfolio and identify in its action plan steps it will take to
achieve any targeted savings.”
In its reply comments the Company has identified the steps it is taking in evaluating the cost
effectiveness of CVR as an energy conservation resource. Staff agrees that the Company has met
the minimum requirements for compliance with the Order; however, once again Staff notes that
8 See Staff Exhibit XXXX – PGE’s response to DR No. 016 in Docket LC 56
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the “consideration” the Company has given to CVR for inclusion in its best cost/risk portfolio is
minimal. A more comprehensive consideration would be to include CVR in the portfolio analysis
in order to gain a better understanding of the economic effects of CVR on a system basis. Staff
understands that PGE has recently concluded a pilot CVR program and is actively analyzing the
results for a November 2014 report. Staff encourages the Company to utilize the results of this
pilot program analysis in the next IRP and to incorporate CVR into its portfolio analysis.
The Company’s 2014 Smart Grid report states that, “CVR is more beneficial in the winter due to
the increase in resistive loads (e.g., electric furnaces) when compared with summer load
composition; however, benefits are realized year-round”. 9 Staff believes that including CVR in
the portfolio analysis would allow the Company to better characterize and quantify those
benefits.
Summary
Staff appreciates the strides the Company has made to date in terms of pilot pricing and load
control programs. Staff encourages the Company to continue to move forward with DR programs
and revisit the assumptions described above.
Compliance with Guideline 8:
In initial comments Staff identified several items that it would like to see investigated in more
detail. These included:
Modeling a carbon market mechanism that is regional as opposed to federal;
Preparing a more comprehensive report of climate change planning activities;
Explanation of how PGE is incorporating the risks of climate change into its planning;
Describing what climate change adaptation and mitigation actions PGE is conducting on
its own behalf and on behalf of is customers; and
A report on any climate change-centered customer engagement activities PGE is
currently undertaking.
Staff requested PGE conduct a Section 111(d) modeling exercise but given the scope of the
challenge Staff understands why PGE objected to this request. EPA’s issuance of a proposed rule
under the Clean Air Act (CAA) 111(d) is a significant federal action and will require a similarly
significant response from PGE and the entire state of Oregon. PGE was not in possession of the
proposed rule prior to modeling carbon dioxide compliance costs or to use the new information
to develop carbon compliance scenarios in the current IRP cycle. The OPUC Staff, the Oregon
Department of Environmental Quality, and the Oregon Department of Energy are currently
working together with PGE to better understand the implications of EPA’s proposed CAA
111(d) rule.
9 PGE’s 2014 Smart Grid Report, at p. 33
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Staff believes PGE will, in time for filing its 2015 IRP, have a better understanding of how this
new federal action will affect PGE’s compliance costs. Such clarity will also provide, as yet, the
best insight into and data needed to develop better carbon dioxide compliance scenarios. With
the closure of Boardman in 2020, PGE becomes better situated to shield itself and its customers
from possible carbon dioxide compliance costs.
PGE did model the potential carbon prices in their IRP. PGE also identified a trigger price that
would affect PGE resource dispatch and Staff is satisfied regarding PGE’s compliance with
Guideline 8.
Environmental Issues: Staff believes that it may be time, given the climate data and increased occurrence of extreme
weather events we are now presented with, that simply modeling carbon pricing and criteria
pollutants is not enough to protect PGE and its ratepayers from the risks of climate change. Staff
issued a number of data requests on PGE during the course of this proceeding in an attempt to
better understand what climate change mitigation and adaptation activities PGE is currently
undertaking to shield itself and its ratepayers from the inevitable costs of a warming and rapidly
changing climate. Staff is concerned about this issue because climate data indicates an increased
potential threat to daily life from climate change through 2100.10
Emerging data from PGE’s records show that its system is beginning to experience a dual peak
when traditionally PGE has been a winter peaking system.11
Climate models predict that over the
coming century the Northwest will experience higher maximum summer temperatures.12
If this
prediction is correct, line losses and peak demand to serve air conditioning load will very likely
increase. PGE needs to take these potential effects into account in their planning.
Models also show an increase in the number of forest fires and the length of the forest fire season
throughout the western states.13
This change may affect transmission lines and transmission
corridors that PGE is dependent on for energy delivery.
Decreased snow pack will affect many aspects of the Northwest hydrological system all of which
may have serious implications for PGE and its customers.14
A decreased snow pack means
10
See Intergovernmental Panel on Climate Change Fifth Assessment; See also Intergovernmental Plan on Climate
Change, Climate Change 2014: Impacts, Adaptation and Vulnerability. 11
See PGE 2013 IRP, at p. 36 12
See USGS, Climate and Land Use Change Research and Development Program, National Climate Change
Viewer, Full NEX-DCP30 model, available at, http://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asp, See also
U.S. National Climate Assessment; See also Intergovernmental Panel on Climate Change, Fifth Assessment Report,
See also Intergovernmental Panel on Climate Change, Climate Change 2014: Mitigation of Climate Change. 13
See The US Forest Service, An Overview available at
http://www.fs.fed.us/documents/USFS_An_Overview_0106MJS.pdf; See also USGS, Climate and Land Use
Change Research and Development Program, National Climate Change Viewer, Full NEX-DCP30 model, available
at, http://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asp, See also U.S. National Climate Assessment; See
also Intergovernmental Panel on Climate Change, Fifth Assessment Report,
http://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asphttp://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asp
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increased stream flow seasonal variability and additional endangered species compliance
obligations at hydropower units owned by PGE or from which PGE takes service. Decreased
stream flows will likely trigger greater reliance on ground water reserves which may mean
greater pumping loads on PGE’s system. Many times these ground water pumps are situated on
long rural radial distribution lines which can significantly affect line voltage and substation
equipment integrity. In addition, increased summer heat may cause distribution line sagging in
highly urbanized areas, so distribution reliability indices may drop.
Models also show increased rainfall intensity is possible. An increase in cloud cover will affect
lighting demand and may lead to increased flooding as well. 15
These are just a few examples of how climate change could affect the Northwest. If these
changes occur, PGE’s customers will be forced to adapt therefore changing how and when they
consume and use electricity. PGE needs to remain aware of these potential impacts on its
generation and distribution system and plan accordingly.
Staff believes that PGE has made positive steps to meet some of the challenges of climate change
through resource diversity and de-carbonization of its resource stack. However, Staff believes
that climate change adaptation and mitigation requires further steps to limit exposure to costly
risks that will affect how PGE delivers energy and services to its ratepayers in the future. Staff
also recognizes that at this point in time PGE does not have a regulatory or legislative mandate
that specifically requires PGE to assess or to take action to mitigate or adapt to climate change
risks. However, Staff believes it would be in the long-term best interest of PGE and their
customers to take initial steps to assess and better understand the risks presented and thereby
develop at least an initial high-level strategy or roadmap to inform its future actions.
In its response to Staff’s initial comments PGE noted a survey which shows that its customer
base is more environmentally conscious then the average utility customer. This survey also
demonstrated customer satisfaction with PGE’s environmental stewardship and leadership. By
taking steps to identify climate change risks PGE may be able to also identify how to coalesce
such stewardship and community support into an opportunity to mitigate climate change risk
thereby saving money for ratepayers in the long term.16
Therefore, Staff recommends PGE and Staff work together in the development of a new IRP
guideline that would require the utility to identify and plan to meet the risks presented by climate
change. This new guideline would direct the utility to identify and model the risks associated
with climate change and develop adaption and mitigation measures and plans to meet those risks.
Staff believes that PGE should be commended for its action to reduce the carbon intensity in its
resource stack while balancing the need to provide reliable, low cost power. In their IRP PGE
14
See USGS, Climate and Land Use Change Research and Development Program, National Climate Change
Viewer, Full NEX-DCP30 model, available at, http://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asp, See also
Intergovernmental Panel on Climate Change, Fifth Assessment Report. 15
See USGS, Climate and Land Use Change Research and Development Program, National Climate Change
Viewer, Full NEX-DCP30 model, available at, http://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asp, See also
Intergovernmental Panel on Climate Change, Fifth Assessment Report.
16
See PGE’s 2013 IRP, Appendix H.
http://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asphttp://www.usgs.gov/climate_landuse/clu_rd/nex-dcp30.asp
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lists some 10 activities that have and continue to result in lower carbon intensity of delivered
energy.
Lastly, Staff notes that PGE’s portfolio is transitioning from coal to a greater reliance on natural
gas. Staff believes that it will become important to monitor the carbon lifecycle cost of PGE’s
natural gas purchases and natural gas-derived electricity purchases. EPA currently conducts a
voluntary natural gas well fugitive emissions reporting program called Natural Gas Star.
Additionally EPA is exploring a rulemaking on reporting and mitigating natural gas well fugitive
emissions. The rapid development and advancements in “shale” gas may mean that this new gas
source has a higher lifecycle carbon content than initially anticipated.
PGE should be, as the Commission Staff is, interested in knowing more about shale gas and its
long term effects on carbon content of the energy delivered to PGE’s end-use customers. As part
of the new guideline work proposed by staff herein, attention should be paid and
accommodations made for carbon lifecycle costs of the fuel choices made by PGE.
Distributed Generation and compliance with Guideline 12:
The PUC’s IRP Guideline 12 states:
“Electric utilities should evaluate distributed generation technologies on par with other supply-
side resources and should consider, and quantify where possible, the additional benefits of
distributed generation.”
In initial comments Staff stated that it thought the Company failed to meet the requirements of
Guideline 12. In its reply comments, the Company has clarified its efforts in analyzing and
considering “distributed generation” (DG), primarily in terms of solar photovoltaics (PV). With
the additional information, Staff agrees that the Company has fulfilled the requirement of
Guideline 12. However, Staff believes that the Company’s compliance is minimally acceptable,
and that future IRPs should examine distributed generation in more detail and to fully evaluate
the benefits of DG.
Distributed generation technologies go far beyond solar PV. Staff encourages PGE to examine
all potential DG sources and technologies, including renewables and also cogeneration and
combined heat and power (CHP). Staff encourages the Company to fully explore the many
benefits of DG and would like to see more potential DG analyzed in the IRP. Distributed
generation has the potential to reduce or eliminate costs, complexities, and inefficiencies of
transmission and distribution systems. This may become particularly salient as the region begins
to experience the effects of climate change.
Load Forecast Issues:
PGE’s load forecast relies heavily on the trends identified by their medium term regression-
based forecast model. This is the same medium term regression used in the 2014 general rate
case (Docket No. UE 283). Staff has closely examined the base forecast as part of Docket
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No. UE 283. In the opening testimony of that docket, Staff presents a comprehensive critique of
the current model. PGE and Staff currently are working cooperatively to identify opportunities to
improve the accuracy of this forecast.
In general, Staff expects that the long term growth in PGE’s load will be less than that in their
filed forecast. On page 23 of PGE reply comments, PGE claims that low recent growth rates are
a short term phenomenon related to the 2008 recession. However, their position appears to imply
that the rapid growth in the 1990s is as relevant to future growth as the current market behavior.
It is more plausible, in Staff’s view, that structural and technological changes in the past two
decades have fundamentally changed the relationship between economic growth, climate, and
energy use. Staff is continuing to provide PGE with feedback and technical analysis regarding
such changes.
PGE has proposed a third party review of the load forecast methodology. The OPUC, PGE, and
other Oregon interveners have a high degree of technical forecasting skill and experience. A
continued commitment from PGE to work cooperatively with Staff and other interveners would
be more effective at establishing and sustaining long term improvements in PGE’s forecast than
the proposed third party review would be.
Natural Gas Forecast Issues:
For the most part, Staff agrees with PGE’s reply comments regarding the natural gas price
forecast, though the Company’s comments do not fully respond to Staff’s concerns. Staff’s
trepidations about the natural gas price forecast are general in nature and meant for consideration
for future IRPs rather than issues that Staff hopes to see changed in this IRP. In this light, Staff
would like to reiterate that it is generally satisfied with the Company’s natural gas price
forecasting methodology.
However, Staff restates its opinion that when the front three years of PGE’s natural gas price
forecast do not differ across the high, base, and low gas price scenarios, the result could be a bias
toward a natural gas resource choice by underestimating the cost risk of portfolios of gas heavy
portfolios. While Staff agrees with PGE that this concern is inconsequential in this particular
IRP, Staff is more concerned about the impact it may have in future IRPs where the Company is
seeking acknowledgement of a new energy resource (as is anticipated in PGE’s next IRP).
Therefore, Staff does not agree with the Company’s characterization that the “years in question”
are 2014 to 2016 (i.e. the front three years of the forecast in this IRP) as this is focused on the
2013 IRP which is not the focal point of Staff’s comments about this issue.
Furthermore, Staff agrees with PGE that both upside and downside risk in gas prices need to be
considered, but the Company’s comments miss Staff’s point that, by not varying gas prices in the
front years, the spread (both up and down ) of the expected costs of the portfolios will be
underestimated. This spread is obviously important since the Company chose a portfolio as its
preferred portfolio that, although not having the lowest cost, did have a smaller cost spread than
the lowest cost portfolio.17
Therefore, Staff’s point was not that costs would be biased upwards
17
Note in page 6 of the IRP the Company states “(w)hen considering overall cost, risk, and reliability performance,
the top three performing candidate portfolios are: Baseload gas/RPS only, Diversified Baseload Gas/Wind, and
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or downward, but that portfolio/resource choice could be biased toward natural gas due to the
underestimated cost risk of these options. Staff would prefer PGE use a high and low estimate
for the front three years of the forecast as well. This would not only assuage the concern about
underestimating cost risk, but also have the added benefit of aligning PGE’s methodology with
the other utilities operating in Oregon.
Staff understands PGE’s concern that updating the natural gas price forecast between the draft
IRP and the actual IRP is problematic and also agrees with PGE that in this specific IRP there
was not a resource choice-altering difference between the May 2013 and December 2013
forecasts. However, in times where gas price expectations change in a material manner from one
forecast vintage to the next (which has happened in the past and could possibly happen again),
using obsolete forecasts could be problematic for a recommendation of acknowledgement.
Again, Staff’s concerns about the natural gas price forecast vintage are geared toward a problem
that could arise and not a problem that materially impacts resource or portfolio choice in the
2013 IRP.
RPS Compliance Alternatives:
Staff appreciates that PGE has added chapter 4 from the 2011 IRP update to the record.
However, Staff is still of the opinion that the Company has not adequately evaluated the use of
unbundled RECs as an alternative to “physical compliance” with the RPS in this IRP.
Like in all other matters, Staff expects PGE to comply with the RPS in a manner that comprises
the best combination of cost and risk for Oregon customers. This option may include using
unbundled RECs for compliance. This issue was addressed in the Company’s latest Renewable
Portfolio Implementation Plan in Docket UM 1683 and Staff expects the Company to plan for
alternatives other than “physical compliance” to comply with the RPS in future IRPs as well.
Staff leaves it up to the Company to determine the decision criteria for building/contracting RPS
resources vs. purchasing unbundled RECs for the final 20 percent18
of compliance that can be
satisfied with unbundled RECs, but is not satisfied with the assumption that no additional
unbundled RECs will be purchased. The timing of new built/contracted RPS resources can be
impacted by the use of unbundled RECs for compliance, which Staff feels is an important option
that was meant to be explored in each IRP.
Staff does not agree with the Company that the decision to comply with the RPS through
physical compliance is a one-time decision that does not need to be re-evaluated as conditions
change. That being said, Staff is not suggesting that physical compliance is not the least
cost/least risk option, only that the Company needs to continue to analyze other options as
conditions do change.
This concludes Staff's final comments.
Natural Gas.” The Company excludes the portfolio with the lowest expected costs (Market w/ Physical RPS) from
this list due to its cost risk and reliability concerns. 18
Or a portion of the 20% of overall compliance.
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Dated at Salem, Oregon, this 25th day of July, 2014
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CERTIFICATE OF SERVICE
LC56
I certify that I have this day served the foregoing document upon all parties of record in this proceeding by delivering a copy in person or by mailing a copy properly addressed with first class postage prepaid, or by electronic mail pursuant to OAR 860-001-0180, to the following parties or attorneys of parties.
Dated this 25 day of July, 2014 at Salem, Oregon.
Joa Grindeland ( Pub c Utility Commission \3 0 Fairview Industrial Drive SE Salem, Oregon 97302 Telephone: (503) 378-6112
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LC 56 Service List NANCY ESTEB, PHD (W) PO BOX 490
CARLSBORG WA 98324 [email protected]
THOMAS H NELSON (W) ATTORNEY AT LAW
PO BOX 1211 WELCHES OR 97067-1211 [email protected]
*OREGON DEPARTMENT OF ENERGY
KACIA BROCKMAN (C) (W) SENIOR ENERGY POLICY ANALYST
625 MARION ST NE SALEM OR 97301-3737 [email protected]
PHILIP H CARVER (W) SENIOR POLICY ANALYST
625 MARION ST NE STE 1 SALEM OR 97301-3742 [email protected]
*OREGON DEPARTMENT OF JUSTICE
RENEE M FRANCE (C) (W) SENIOR ASSISTANT ATTORNEY GENERAL
NATURAL RESOURCES SECTION 1162 COURT ST NE SALEM OR 97301-4096 [email protected]
CITIZENS' UTILITY BOARD OF OREGON
OPUC DOCKETS (W) 610 SW BROADWAY, STE 400 PORTLAND OR 97205 [email protected]
ROBERT JENKS (C) (W) 610 SW BROADWAY, STE 400 PORTLAND OR 97205 [email protected]
G. CATRIONA MCCRACKEN (C) (W) 610 SW BROADWAY, STE 400 PORTLAND OR 97205 [email protected]
CLEANTECH LAW PARTNERS PC
DIANE HENKELS (C) (W) 6228 SW HOOD PORTLAND OR 97239 [email protected]
DAVISON VAN CLEVE PC
S BRADLEY VAN CLEVE (W) 333 SW TAYLOR - STE 400 PORTLAND OR 97204 [email protected]
DAVISON VAN CLEVE, PC
TYLER C PEPPLE (W) 333 SW TAYLOR SUITE 400 PORTLAND OR 97204 [email protected]
NATURAL RESOURCES DEFENSE COUNCIL
RALPH CAVANAGH (W) 111 SUTTER ST FL 20 SAN FRANCISCO CA 94104 [email protected]
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ANGUS DUNCAN (C) (W) 2373 NW JOHNSON ST PORTLAND OR 97210 [email protected]
NORTHWEST PIPELINE GP
TERESA HAGINS (W) 8907 NE 219TH STREET BATTLE GROUND WA 98604 [email protected]
STEWART MERRICK (W) 295 CHIPETA WAY SALT LAKE CITY UT 84108 [email protected]
NW ENERGY COALITION
WENDY GERLITZ (C) (W) 1205 SE FLAVEL PORTLAND OR 97202 [email protected]
PACIFIC POWER
SARAH WALLACE (W) 825 NE MULTNOMAH ST STE 1800 PORTLAND OR 97232 [email protected]
PACIFICORP, DBA PACIFIC POWER
OREGON DOCKETS (W) 825 NE MULTNOMAH ST, STE 2000 PORTLAND OR 97232 [email protected]
PORTLAND GENERAL ELECTRIC
PATRICK G HAGER (C) (W) 121 SW SALMON ST 1WTC0702 PORTLAND OR 97204 [email protected]; [email protected]
V. DENISE SAUNDERS (C) (W) 121 SW SALMON ST 1WTC1301 PORTLAND OR 97204 [email protected]
PUBLIC UTILITY COMMISSION OF OREGON
JOHN CRIDER (C) (W) PO BOX 1088 SALEM OR 97308-1088 [email protected]
PUC STAFF--DEPARTMENT OF JUSTICE
MICHAEL T WEIRICH (C) (W) BUSINESS ACTIVITIES SECTION 1162 COURT ST NE SALEM OR 97301-4096 [email protected]
RENEWABLE ENERGY COALITION
JOHN LOWE (W) 12050 SW TREMONT ST PORTLAND OR 97225-5430 [email protected]
RENEWABLE NORTHWEST
RENEWABLE NW DOCKETS (W) 421 SW 6TH AVE., STE. 1125 PORTLAND OR 97204 [email protected]
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MEGAN DECKER (C) (W) 421 SW 6TH AVE #1125 PORTLAND OR 97204-1629 [email protected]
SMALL BUSINESS UTILITY ADVOCATES
JAMES BIRKELUND (C) (W) 548 MARKET ST STE 11200 SAN FRANCISCO CA 94104 [email protected]